Opening Comments
My last note was on my daughter’s casein allergy. The most opened links were the WSJ article on my reader, Andy Lee, and his business and the video of the Jaguar eating a crocodile. I heard from an impressive allergist who made some nice comments regarding the Rosen Report. I love hearing from the experts. He corrected me and suggested it was more of an intolerance than an allergy and he is 100% correct. When the experts chime in, you must take note. Thanks Dr. Dave. He and his father are avid readers. Sounds like they need some Rosen Report hats.
I get so many weekly emails asking if I did not send out a Rosen Report. For some reason, many systems block emails from Substack thinking it is spam. Sometimes they don’t go to Junk, they are just blocked. I tend to RARELY miss writing on Wednesday and Sunday. If you do not see one, you can do one of a handful of things. You can download the Substack App and sign up for the Rosen Report. You will receive the newsletter automatically in the App. You can follow me on LinkedIn or Facebook, as I post all my newsletters there. Lastly, you can just check my Substack page. All my newsletters are posted since April 2021. The numbers suggest I miss two or so a year. I try to keep a consistent cadence whenever possible and take off one or two during a the winter holiday and maybe if I am doing a crazy travel/fishing trip. Also, remember that some email servers truncate my letter, so hit “View entire message.”
I wrote extensively on crypto and took some hits as outlined in detail. I’m A Crypto Idiot from November 2021. Mind Blowing Crypto from Dec 2021. NFTs Flatlining from May 2022. My Bitcoin investment is back in the money and I am +15% on my BTC ($52k). At one point, my total crypto bets were - 85%. However, with BTC, ETH, Solana, AVAX rallying hard, I am probably -30% now. I presume all my little alt-coins are near worthless (DOT, RBN, LOOKS, WMEMO, KP3R, Tether…).
Markets
Restaurant Prices Surging
Growing Government Interest Expense
Key to Avoiding an Audit
World Population Forecasts
Florida Apartment Market Cooling
Plunging Office Valuations
Arbor Realty Trust Late Mortgage Payments
CBRE Earnings Report Lifts Related Stocks
Video of the Day-Amazing Dog
My Instagram addiction strikes again. Check out this dog that may have a higher IQ than most people. The dog saves the owner’s life as it is a well-trained pet. Very short video. What do you think?
Teeth That Blind-Slippery Slope of Cosmetic Procedures
I had some dental work done recently and saw a flyer about teeth whitening. I asked about the process and the dentist explained it. To be clear, I am 54 years old and have never smoked a cigarette and never had a cup of coffee. The world is a better place due to my lack of coffee. I do drink red wine which is a staining agent, but am told coffee and cigarettes are the worst for teeth. The dentist suggested my teeth could be whiter with a one-hour procedure. It was a few hundred dollars and decided to start the slippery slope of my first cosmetic action. Teeth whitening one day, dyeing my hair the next, Botox, followed by a facelift and tummy tuck will not be the progression for me—famous last words.
I made the appointment a couple of weeks out. I had the choice of an at-home do-it-yourself treatment that takes over a week or in the office for an hour. I had zero faith that I would do it correctly myself, so I went with the in-office treatment. They put this odd contraption on your mouth to keep it open to allow the whitening agent to set. It is a little uncomfortable, but not bad. The toothpick prevents you from biting down.
The hygienist then mixes the teeth whitening agent which is ironically the color, red.
The hygienist then put some protection on my gums. After that, she put the red gel on my teeth. It was a little uncomfortable. A touch of the whitening gel got on my gums and it burned. Nothing serious. They did whitening in two stages of 20 and 25 minutes each just a few minutes apart. The blue gel on my gums prevents the whitening agent from getting on them.
Overall, it was not bad and I can see a difference in my teeth. The issue is, for a few days, I was supposed to stay away from anything that could dye my teeth before the whitening agent is fully set. No red wine, ketchup, mustard, berries, Listerine, Gatorade…. I was so scared to eat anything to ruin my new pearly whites, it was a little frustrating and I dropped a few pounds. On Thursday night I think I ate 4,000 calories after making a feast for guests as I had barely eaten in two days. Maybe I need that tummy tuck after all.
Despite the awkward pictures and a stupid thing keeping my mouth open for an hour, the whole process was pretty easy. I am not sure I ever do it again and hopefully don’t have to. As the Rosen Report continues to grow, I wanted to be sure I gave my readers and viewers the perfect choppers. I think the mission was accomplished. If you see me, you may need to wear sunglasses given my bright smile. I just hope I can fend off the urge for future procedures to keep the fountain of youth going. When it comes to cosmetic procedures, my friend John said, “It is like a tattoo. You never get just one.” Let’s hope my dear friend is wrong on this one, as I do not have the urge to look like Justin Jedlica, the human Ken Doll who has undergone almost 1,000 cosmetic procedures including 25 implants.
Quick Bites
We had more hot inflationary data with the producer price index rising .3% for January. Economists surveyed expected a .1% increase. The S&P was -.2% on the week and the Nasdaq was -.6%. The PPI data forced Treasury yields higher again with the 2-Year +8bps to 4.65% and the 10 year +5bps to 4.29%. Friday’s hot inflation report pushed the average 30-year Fixed rate mortgage back up to 7.14% after being 6.6% in December. Oil was +2% on the week due to Middle East concerns which overshadowed demand questions.
This CNN article is entitled “Surging Restaurant Prices Are Making Dining Out a Luxury.” I must tell you, I agree 100%. Inflation is killing restaurants. Food costs have gone through the roof as have labor and insurance. A friend owns a restaurant in Boca and told me he is paying the hostess $35/hr. When I was a host at a restaurant 35 years ago, I made $4/hr. My favorite restaurant near Boca is Cafe Maxx. I ordered a snapper for $60. When I moved down 7 years ago it was $38. I refuse to go out for steak today. The standard price is $75 for a prime cut with no sides. I make it better and cheaper myself using Wagyu (much better cut). This NY Post article just found NYC to be the have the most expensive average one topping pizza in the country at $33.65. The rising cost of doing business — increased labor expenses, sky-high percentages paid to third-party delivery services, higher rents and ingredient costs — is to blame, according to one owner. Growing up in Florida, I made and delivered pizza for 20 restaurants. I recall selling pizzas for $5.99. I am old! Any chance to insert my mullet picture from 1986 must be taken advantage of. The bottom picture is from my pizza delivery days.
Good WSJ article about government spending and the ballooning interest expense. The U.S. government is expected to pay an additional $1.1 trillion in interest over the coming decade, according to the Congressional Budget Office’s latest estimates. Interest costs are on pace to surpass defense this year as one of the largest government expenses in the budget. Only Social Security and Medicare are forecast to be bigger burdens in the coming years. America is expected to spend $870 billion, or 3.1% of gross domestic product, on interest payments this year. That is nearly double the annual average of 1.6% of GDP since 2000. And interest costs are projected to reach 3.9% of GDP by 2034. What about entitlements and careless government spending? Many smart investors are raising their voices on the concerns I share. Check out the charts. I ask for some common sense on spending and taking a tougher stance on entitlements.
This CNBC article is about how to avoid the “Audit Lottery,” according to tax professionals. For example, I was told not to deduct my home office as that is a flag. I never have as a result. Check out the link for more details. The CNBC article outlines the following:
In my last note, I wrote about the Chinese population concerns and the possibility of 1bn fewer Chinese people by the end of the century. This NYT article is entitled, “The World’s Population May Peak in Your Lifetime. What Happens Next?” There is a great chart in the article about fertility rates by country that is quite concerning but too big for me to insert in the newsletter. The main reason that birthrates are low is simple: People today want smaller families than people did in the past. That’s true in different cultures and economies around the world. It’s what both women and men report in surveys.
Israel
Israel Quits Ceasefire Talks Over ‘Delusional’ Hamas Demands
Senior Hezbollah commander said among dead in IDF strikes on southern Lebanon
Biden-Netanyahu Relationship at Boiling Point as Rafah Invasion Looms
Other Headlines
Japan is no longer the world’s third-largest economy as it slips into recession
Interestingly, the Nikkei is near an all-time high as many of the larger companies are international. Germany is in a similar situation. Despite the strength of the Nikkei, look at the Topix Bank Index in Japan -81% from 1989 peak.
NYC Budget Surplus Exceeds Mayor’s Estimate by Nearly $3 Billion
The fiscal monitor also predicts that the city will have a $3.3 billion surplus for fiscal year 2025, which begins July 1, while projecting gaps of $6.5 billion, $5.8 billion and $5.6 billion for the following three years.
Retail sales tumbled 0.8% in January, much more than expected
Shake Shack stock surges 20% on fourth-quarter profit, strong 2024 outlook
Nvidia passes Alphabet in market cap and is now the third most valuable U.S. company
Here’s what Meta CEO Mark Zuckerberg has to say about the Apple Vision Pro
JPMorgan Chase, BlackRock drop out of massive UN climate alliance in stunning move
JPMorgan Chase says its in-house sustainability efforts are sufficient to fight global warming
Illegal immigration could have major impact on House seats, Electoral College
Trump On Pace to Drain Legal Funds by July, With Only $27 Million Left
There is talk of Trump selling some of his key assets to pay the fines. I just don’t believe he has anywhere near the money he claims.
Former President Donald Trump launched a line of sneakers ranging in price from $199 to $399.
FBI source charged for allegedly providing false info on Bidens, which was cited by Republicans
CIA Started Russia Collusion Hoax By Asking Foreign Governments To Spy On Trump Campaign
The CIA ‘illegally mobilized foreign intelligence agencies to target Trump advisors long before the summer of 2016.’ I feel as Americans, we need to learn more about these allegations. I am not suggesting they are accurate, but feel we have the right to know the truth.
Fani Willis just gave Donald Trump exactly what he wants
This is MSNBC’s take which is a Liberal news organization. They admit it was positive for Trump even if Willis is not disqualified. I did not listen to the entire testimony, but from what I heard, she should be disqualified. Seems to be that she admitted campaign finance violations by suggesting she kept campaign cash for personal use. Also, there are contradictions as to when she started the relationship with Wade. She makes $110k/year and is worth $8mm. Willis traveled to resorts with Wade, where he paid with a business credit card. She claims to have repaid him in cash and he claims to have zero evidence, ATM receipts of any cash transactions. This said, the Judge who will decide is a Republican with a good background and experience including a former US attorney. He has allowed Willis to engage in outrageous behavior in his courtroom without censure.
Outrage In Spain As Children Paraded Around In Lingerie For 'Pride'
Look at the pictures of 9-year-olds in lingerie. It is disgusting. Sexualizing innocent children is wrong.
I think it is dangerous to encourage kids to consider surgery. If you are an adult and want to do it, I support it. Not for a 9 year old.
Five-Time Deported Illegal Alien Accused of Killing 10-Year-Old Boy Walking Home from School
A porous border has consequences for innocent civilians. There are growing stories about repeat offenders who are in our country illegally. I am sorry, The policies around these topics are horrendous.
Welcome to the NYC Subway. Check out the video.
Thousands of migrants in NY quietly collecting ‘welfare’ through Hochul rule change
NYers, your hard-earned tax dollars are being given to illegal immigrants.
Property and casualty insurance is out of control. My new sponsor, Lang Insurance, has helped dozens of Rosen Report readers on their package policy coverages across the US.
Shopping online at 2 a.m.? That’s a red flag for buy now, pay later lender Affirm
Please don’t buy it if you cannot afford it. The article suggests that late-night shopping results in “riskier” transactions more likely to default. I had never thought of this. “Human beings don’t make the best decisions at two o’clock in the morning,” according to the CFO.
Skip these 5 household items at Costco—they aren’t worth the bargain, says expert at finding deals
Breakfast cereal/Lip balm/Over-the-counter pain medications/Fresh produce/Spices
Artificial intelligence, real emotion. People are seeking a romantic connection with the perfect bot
How sad of a world do we live in? People are falling in love with AI bots? I am glad I am not a kid today.
Tom Brady: I ‘wasn’t going to sign up for more’ Bill Belichick
Caitlin Clark sets NCAA women's basketball scoring record in style vs. Michigan
Top 17 Cities for Contracting STDs in 2024
Top 5: Memphis, TN/Jackson, MI/ Columbia, SC/Baltimore/MD, Philly/PA
MrBeast, reach out to me at rosenreport@gmail.com and I will help you with your finances at no charge. I appreciate you building an empire, but need to have savings given your success.
Before and after photos show the shocking condition of Ukrainian soldier released by Russia
Awful pictures. Look like a Holocaust survivor.
Russian opposition leader Alexei Navalny dies in prison
When you oppose Putin, you tend to die by falling out of a building, radioactive poisoning, a plane crash or in prison.
As WW3 fears grow now Armenia and Azerbaijan are 'on brink of full-scale war'
Iran declares Antarctica its property in direct challenge to Biden, global treaty
Real Estate
Good article I found in the CRE Daily. I check out CRE Daily constantly. Florida's apartment market is cooling off after years of high demand, with increased development in affordable beach towns leading to higher inventories and lower revenues. Florida's apartment market, representing 17 of the nation's top 150, is witnessing a sharp reversal. From a high of nearly 20% growth in early 2022, these markets now report a 3.4% revenue drop, diverging from the stable U.S. average and outpacing declines in states like California and Texas. This shift marks the end of a boom fueled by the remote work era, which initially drove high demand and construction in affordable coastal towns.
The decline in Florida's apartment market revenues can be attributed to lower rents (-2.3%) and occupancy (-1.1%) in the past year. Additionally, the rising cost of insurance has impacted apartments significantly, with big spikes in Tampa, Miami, West Palm Beach, and Jacksonville. These markets enjoyed increased demand in 2021 and 2022 but are now facing the consequences of the surge in inventory.
Great Bloomberg article entitled, “The Brutal Reality of Plunging Office Values Is Here.” In Manhattan, brokers have started to market debt backed by a Blackstone Inc.-owned office building at a roughly 50% discount. A prime office tower in Los Angeles sold in December for about 45% less than its purchase price a decade ago. Around the same time, the FDIC took a 40% discount on about $15 billion in loans it sold backed by New York City apartment buildings. As of December, offices accounted for 41% of the value of distressed US properties, which stood at nearly $86 billion, according to MSCI. Potential distress, which refers to the erosion of an asset’s current financial standing, is at nearly $235 billion across all property types. Apartments are high on that list, with more than $67 billion in potential distress. More than 30% of that value is tied to buildings bought in the last three years, many at peak prices.
Another WSJ article entitled, “Late Mortgage Payments Pile Up for Giant Apartment Lender.” Arbor Realty Trust rose from its roots on Long Island, N.Y., to become a property-finance powerhouse. As a major lender to Sunbelt apartment buyers, it helped fuel a speculative real estate frenzy in 2021 and early 2022. That boom ended when interest rates shot up, imperiling borrowers’ ability to make payments on Arbor’s loans that were often repackaged into bonds and sold to investors. Now, the company is contending with a wave of property owners struggling to pay interest on their floating-rate debt. Borrowers of a quarter of Arbor’s securitized debt were late on debt payments as of mid-January, according to the data company CRED iQ, which analyzed figures from the bonds’ trustee. Borrowers of around 9% of the debt were 30 or more days late. The article suggests that eventually most payments were made. Remember, these loans are primarily on apartments, not offices in major US cities. When rates move as much as they did and inflation makes costs go up along with massive insurance premium increases, you run into issues. Labor, insurance, maintenance costs and taxes on buildings are far higher today than pre-pandemic.
Great Bloomberg article entitled, “Dozens of Banks Rapidly Piled Up Commercial Property Loans.” About two dozen banks in the US had portfolios of commercial real estate loans in late 2023 that federal regulators indicated would merit greater scrutiny, a sign more lenders may face pressure from authorities to bolster reserves. The chart below is interactive on the link and shows each bank with numbers. While NYCB, which set off a cascade of stock drops in recent weeks as it braced for potential loan losses, was the biggest US bank that came close to fitting the regulators’ criteria, many smaller lenders went further. That’s because they amassed outsize concentrations even faster, according to a Bloomberg analysis of federal data from more than 350 bank holding companies. Bloomberg’s review found 22 banks with $10 billion to $100 billion of assets hold commercial property loans three times greater than their capital. Half of those firms had growth rates surpassing the thresholds laid out by regulators. The tally was even higher among banks with less than $10 billion of assets: 47 had outsize portfolios, of which 13 had swelled rapidly.
A Bloomberg article entitled, “CBRE ‘Optimism’ Sparks Rally in Embattled Commercial Real Estate,” gave a much-needed lift to R/E stocks. The commercial real estate sector got a boost Thursday when CBRE Group Inc. reported strong fourth-quarter earnings and suggested the worst was over for the downtrodden market for office leasing. Shares of the world’s largest commercial real estate stock jumped to the highest level in almost two years, while all but one of the 31 members in the S&P 500 Real Estate Index closed the day in the green. Smaller peers including Cushman & Wakefield Plc and Jones Lang LaSalle Inc. both gained more than 8%. “We are cautiously optimistic that the worst is over for office leasing, particularly for Class A properties where we generate approximately two-thirds of our leasing revenue,” CBRE said.
© 2024 The Rosen Report LLC. All rights reserved. Does not constitute investment, financial, legal or tax advice. Consult with your lawyers and professional financial advisers. Rosen Report™ #657©Copyright 2024 Written By Eric Rosen.